Thursday, October 27, 2011

Economy: The Consumers Are Back

The U.S. economy, measured by the GDP (Gross Domestic Product, a gauge for the national income) grew 2,5% last quarter, faster than in the 2. quarter (plus 1,3%). The growth was fueled by higher consumer expenditures. Household purchases, the biggest part of the economy, increased at a more-than-projected 2.4% pace, Bloomberg reported. The increase in consumer spending last quarter followed a 0.7% gain in the second quarter and exceeded the 1.9 percent median forecast in a Bloomberg Survey. These purchases added 1.7% points to the growth number. Business investment (that is corporate spending on equipment and software) climbed at a 17.4% pace, the most in a year. It contributed 1.2% point to growth.

These numbers aren`t surprising. They fit to the strong retail sales numbers I wrote about recently (how-us-consumers-save-world). The new data confirm that the consumers are the engine of the U.S. economy. People are still optimistic instead of the perpetual negative news drum in the media. I guess this has a tradition in the U.S., maybe a heritage to the pioneer ancestors.

As long as the U.S. consumers are willing to expand their purchases the majority of the companies will flourish and will overcome the problems in other parts of the U.S., such as the struggling financial sector or shrinking government expenditures.

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